Latvia/ 6. Financing of culture

Latvia's economy experienced GDP growth of more than 10% per year during 2006–2007, but entered a severe recession in 2008 as a result of an unsustainable current account deficit and large debt exposure. Triggered by the collapse of the second largest bank, GDP plunged by almost 18% in 2009 and the European Union, the International Monetary Fund, and other international donors provided substantial financial assistance to Latvia as part of an agreement to defend the currency's peg to the Euro in exchange for the government's commitment to stringent austerity measures. In 2011, Latvian GDP grew again by 5.5% and thus Latvia was among the fastest growing economies in the European Union. The IMF / EU programme successfully concluded in December 2011.

The Euro was introduced in Latvia on 1 January 2014.

The tendency towards an increase in the budget for culture was still evident up to the year 2008. There was a significant increase in salaries for cultural employees during the years 2006-2008. In 2008, the average monthly salary for public administration employees was LVL 564 (EUR 806), while in public cultural institutions it was LVL 504 (EUR 720). In 2009, salaries in public administration decreased by 11%, while in the public cultural sector – by 35% if compared to 2008 (see chapter 4.2.9).

In 2009, there was a dramatic drop in public financing for culture. It was followed by an even deeper crisis in 2010 when the budget of the Ministry of Culture was reduced by 43% if compared to 2008. The majority of cultural operators were concerned with the critical reduction of the budget for the State Culture Capital Foundation – the grant-giving body to secure the diversity of cultural activities all over Latvia. In 2010, its budget was reduced to 2.1 million LVL (3 million EUR) which was 72% less than in 2008 (see chapter 2.1).

In 2011, the budget of the Ministry of Culture was increased due to the additional funding for the construction of the National Library. A significant construction project – the building of the Latvian National Library was started in 2008 and finished in 2014. In 2011, the costs of constructing the Latvian National Library reached 32.6% of the total budget of the Ministry of Culture (see chapter 4.3). A slight increase in the cultural budget followed in the coming years. See chapter 6.2 about the budget of the Ministry of Culture.

Household expenditure for recreation and cultural activities is slowly increasing again since 2011 (see chapter 8.2.1).

The budget of the Ministry of Culture increased until the economic crisis in 2008. In 2012, the budget of the Ministry of Culture (including earmarked subsidies) was 95 217 000 LVL (135 million EUR). In 2013, the budget of the Ministry of Culture increased to 100 107 000 LVL (142 million EUR).

Figure 3: The expenditure of the Ministry of Culture, in thousands LVL, 1995-2012Source: The Ministry of Culture, 2014.

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